Charge Offs: Can I Still Get A Mortgage?

Charge off are debts that a creditor has removed from their accounting balance sheet.  Most creditors consider delinquent debts as charge offs after six months.  Creditors figure if the debtor has not made any attempt in paying their debt in six months, they will have no intention on paying it in the future and do not want it on their balance sheet as an asset.  Charge off debts are reported on a person’s credit report as charge off accounts and will remain on the person’s credit report for a period of 7 years from the date of last activity,  which is the date of last payment.

Charge Off Accounts Sold To Third Party Collection Agencies

A creditor can sell charge offs to a third party collection agency for pennies on the dollar and the third party collection agency can try to collect on the charge off debt at full face value plus interest and fees.  The creditor and/or collection agency also can try to sue you in court and have a judgment issued, however, most charge off accounts do not go through the court system since suing you will cost them money in attorneys and court costs.

Charge Offs: Affects On Your Credit And Mortgage Approval Process

Recent charge off debts will definitely plummet your credit scores and might affect you in getting new credit.  However, as time passes,  charge off debts will have less and less impact on your credit scores.  Charge off debts that has been aged more than two years will not have any impact on your credit scores.  Charge off accounts will remain on your credit report for a period of seven years and after the seven years are up, the charge offs will be deleted off your credit reports.

Statute Of Limitations And Charge Offs

Technically, even you have charge offs, you still owe that debt until the statute of limitations runs out.  Statute of Limitation on charge offs depend on the state your reside in but most statute of limitations on charge off debts in most states is 5 years.

Aged charged off accounts have no impact on you getting a home buyer a mortgage loan approval.  Recent charge offs that is less than a year can create a problem but any charge offs of a year or older is fine.  A letter of explanation is required.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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